Jérôme Genest is pursuing a Master’s degree in International Studies at the University of Montreal. Passionate about international relations, he has worked on topics ranging from Canadian politics and cultural identities to global economic and security issues.
Globalization can be understood as the amplification of human interactions and connectivity. It is the shrinking distance between people and places that can allow for better communication and coordination. This phenomenon has undeniable effects on how societies organize themselves and interact with each other. Governments often play the pivotal role between people and the increasingly accessible rest of the world. In many cases, federal systems have been impacted by globalization. Some countries have experienced a concentration of authority at the national level, while others have moved toward greater regional autonomy. For instance, Austria has gradually become more centralized over the years, whereas Belgium has pursued a decentralization path (Erk & Koning, 2009). Each federation adapts to global pressure in ways shaped by their institutional arrangement and cultural context.
If we understand federalism as a complex system of multiple government levels with shared sovereignty and intertwined jurisdictions, one can characterize globalization as a compatible force enhancing linkages between regional, national, and international communities. In the rich variety of federal systems across the globe, globalization articulates differently and impacts governance in distinct ways. In fact, if some systems have experienced the concentration of power toward their central government, others have seen the devolving of authority, and in many cases both happen simultaneously. A reflection on the unique approaches of how federal countries deal with the forces of globalization can help us understand how federalism adapts to balance local, national, and international pressures and challenges.
Rebalancing of Power Through Centralization and Subnational Empowerment
Over the recent decades, Australia has provided an illustrative example of the adaptive capacity of federalism to the changes brought by globalization. In the 1970s and 1980s, Australia experienced an important mineral exploitation boom. As mineral resources were concentrated in their territories, the states of Queensland and Western Australia gained significant economic importance in the country during this period. This growing wealth earned these regions a stronger voice and increased their political influence in intergovernmental politics, reorienting the previous distribution of power (Galligan, 2003). At the same time, the expansion of international trade enhanced the Commonwealth’s central role in issues of global affairs. In parallel, new institutions emerged allowing for a better distribution of power between regional actors. In 1992, the Council of Australian Governments (COAG) was established as an intergovernmental platform to exercise organized influence over national policymaking (Galligan, 2003). It improved dialogue between the levels of governments and enabled coordinated adaptation to new foreign pressures, especially for cross-jurisdictional issues. Over the years, the COAG redesigned itself to include more “forms of collaborations” between the agencies and officers of all levels of governments (Blayden, 2013). Ultimately, the COAG acted as a central mechanism for managing the complexities of Australian federalism by contributing to a more integrated and collaborative governance framework.
Another cooperative initiative was the Special Premier’s Conferences. Initiated in the 1980s, the conferences were designed to enable the Australian governments to better manage crucial economic issues (Galligan, 2003). It offered the opportunity for the two levels of government to have open talks about disputed jurisdictions and establish joint decision-making for economic matters. When rising global trade began clashing with Australian tariff protection in the early 1990s, a serie of Special Premier’s Conferences emerged to push a set of reforms aiming to address economic inefficiency (Galligan, 2003). This joint-decision making forum to discuss cross-jurisdictional issues, such as transport and electricity, was a step toward a more efficient and coordinated policy approach.
Through the development of institutional arrangements, federalism served as a mechanism to permit subnational governments to organize and ensure cohesive domestic responses. The Australian system demonstrates how globalization can induce centralization and decentralization in the same process. Since the growing accessibility to the world demanded a strong central authority, a simultaneous need for more local coordination empowered regional entities to build more influence and institutional power. Australia’s choice of institutional development, sometimes attributed to the nation’s distinctive political structure (Maley, 2015), is a trajectory peculiar to the Australian context.
Globalization also created the need for intergovernmental mechanisms to rebalance power in Canada. When negotiating free trade with the United States and Mexico in the context of the NAFTA in the 1990s, the Canadian central government took an assertive economic role to orchestrate trade relations with its neighbours. Yet because of Canada’s federal structure, Ottawa also created different committees to consult provincial governments. The Committee for North American Free Trade Negotiations and the Committee for Free Trade Agreement are examples. These bodies improved coordination between the national and provincial governments and ensured protection of regional interests when dealing with international affairs (Carnegie, 2007). Here, similarly to Australia, global trade emphasized the necessity of recognizing and accommodating the federal balance of power, compelling Canada to evolve its intergovernmental structures to both assert national policy abroad and preserve provincial autonomy at home.
Nambung National Park, Western Australia
Paradiplomacy: A Pragmatic Response to Global Pressures?
Alongside this apparatus, Canadian provinces have taken an increasing autonomous role in global connectivity. Like in many other federations, Canadian provinces exercise a degree of freedom to engage in paradiplomacy, a concept referring to the involvement of subnational governments in international affairs independent of the central government. For instance, in Canada, the provinces of Ontario and Quebec pursued such initiatives by partnering with several American states to form the Conference of Great Lakes and St. Lawrence Governors and Premiers in 1983. This regional intergovernmental organization manages a complex array of agreements on economic and environmental issues. It has grown into an important international cooperative institution that has not met political or legal opposition from the central governments of the US or Canada (Manassa, 2021).
In recent years, many subnational actors have in fact taken a prominent role in global connectivity, blurring the traditional political and jurisdictional limits imposed by nation-states. During the COVID-19 pandemic, for example, the American federal framework permitted Maryland to unilaterally manage a deal with South Korea to supply test kits. The state acted unilaterally because it was dissatisfied with the federal government’s handling of the crisis (Bennet & Klein, 2020). Additionally, when the diplomatic tensions rose high between China and the US over the trade war in 2019, California organized a “multi-organizational partnership”, a paradiplomatic initiative to encourage trade relations with China (Manassa, 2021).
Similarly, in 2003, the state of Kansas entered into a trade agreement for agricultural products with Cuba, a country then considered a state sponsor of terrorism by the U.S. Department of State. The initiative met no opposition from the Bush administration (Manassa, 2021). The idea behind these instances of paradiplomacy is that leveraging international ties from a subnational standpoint have proven to be an alternative to typical state-to-state relationships. It has shown how federalism can allow accessible channels to address local issues that are sometimes more adequate than formal levers of national foreign policy.
In other cases, countries possess constitutional language that facilitate the freedom of subnational entities to engage in and manage international affairs. Austria and Germany, for example, allow their subnational governments to create international treaties when it stays within their legislative jurisdiction and competencies (Manassa, 2021). In contrast, Brazil has vague constitutional limits about international treaties. This permits, to some extent, Brazilian states to negotiate “contracts” with foreign States. In 2019, for example, France partnered with several Brazilian states on matters of nature conservation. (Spring & Catarina, 2019).
Beyond illustrating flexibility, paradiplomacy has contributed to strengthening federalism by providing subnational entities greater autonomy and a tangible sense of agency in global affairs. It tends to encourage cooperation rather than competition between levels of government and allows, to a certain extent, regions to tailor their own global strategies. For instance, the Canadian province of Quebec promotes its unique cultural identity abroad through a network of international offices. This approach advances the region’s global strategy, but also permits an ease in language and cultural frictions within the Canadian federal framework. It demonstrates how paradiplomacy can reinforce national cohesion through recognition and autonomy. Constitutional frameworks of federal systems can open doors for subnational actors to shape international relations and blur traditional boundaries. Such practices highlight the growing complexity and multi-layered nature of diplomacy in the 21st century.
The Erosion of Globalization: A Challenge to Federalism?
Globalization has long been expanding the room for maneuver for both central and subnational governments. But its recent slowdown poses a different challenge. Recent international events, like growing worldwide protectionist and nationalist sentiment, global supply chain disruptions, and rising geopolitical tensions are raising doubts over the existing international order. In such context, the capacity of federations to adapt may be tested not by the pressures of integration, but by the risks of fragmentation.
Centralization may arise as a natural response to global fragmentation. Often expressed as economic nationalism, this idea of nationalism advances domestic interests at the expense of multilateralism, foreign interests, and international integration (De Bolle & Zettelemeyer, 2019). In 2016, when the United Kingdom decided to leave the European Union, the central government adopted this national approach to external affairs in response to domestic grievances (Autor et al., 2021). Brexit illustrates this idea of reappropriation of domestic sovereignty from the EU into the central government in response to foreign stress, in this case poor economic growth, migration, and the “China shock” (Autor et al., 2021). Trade policy and immigration stood out as important areas from which the UK parliament sought to regain control over. Yet in other cases, as seen previously during the COVID-19 pandemic, paradiplomacy can emerge as counterweight when central governments turn inward. It is the very nature of federalism that provides this adaptability, enabling countries to tailor their reaction through both centralization and decentralization when circumstances demand it.
Federalism, in this sense, is not only compatible with globalization but can also be resilient to its erosion. Federal states have the savoir-faire and an already sophisticated system of governance that can balance itself to include international implications in its interplay (Galligan, 2003). By distributing authority across multiple levels of government, federations preserve the possibility for experimentation, adaptation, and flexibility even in times of global adversity. Ultimately, federalism is a dynamic system of power distribution that can expand and contract in response to domestic and international conditions.
Federal systems are very capable entities in adjusting to the twists and turns of globalization, and their resilience and versatility makes them a reliable framework to navigate uncertain times.
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